Beijing Bankruptcy
03/19/2014 | | econ70, Economic forecasting, economist on radio, economist on TV, eisenberg and economics, Eisenberg and housing economics, Eisenberg and public speaking, Elliot eisenberg, funniest economist, funny housing economist, Graphsandlaughs, graphsandlaughs and eisenberg, housing sales, MLS, mortgage banking, Multiple listing service, politics and economics, Public speaking economist
The decision by the Chinese government to finally let a domestic bond default occur is good, as it may force the market to start pricing in risk. But, investors have no idea why Beijing allowed this default or what criteria the government will use in determining future bonds defaults. Will firm size or industry matter or political connections? The government remains in complete control and investors will be left guessing.